In Tony's blog post, Financial vs. Development, he discusses two different possibilities on pledges-- are they a firm commitment, or are they more a promise to make a contribution in the future. This might seem like semantics, but when it comes to financial tracking, you would want to handle them differently. Here's an article from previous FundRaiser lead trainer, Larry Weaver, that helps you decide how you might want to handle these two different situations.

1. Divide and Conquer: Pledge or Promise?

First, it's good to know whether your pledges are better tracked through FundRaiser's Pledge Module (optional in Select, included in Professional) or not. That will depend on the make-up of the pledge itself. If a person (or organization) promises to give you a particular gift in the future, and will be giving it to you in one payment, then you don't need to use the Pledge Module, necessarily. The determining factor, in this case, might be whether you need to track promised payments as "accounts receivable" for accounting purposes. If so, you'll probably want to use the Pledge Module, as it makes it easier to do. If not, then you may just need to use the Gift Type Code "Later - Promise to Pay", to record a pledged amount.

A small family foundation run by a friend of our board chair promised us $10,000 at the beginning of the year and they have not yet paid it. Our board chair was recently told by her friend that the foundation probably wasn’t going to be able to pay because the market had wiped out a lot of their assets, but I can’t understand why they didn’t pay sooner.

The receiving and the handling of donations made to non-profit organizations are simple to do, but very often poorly done. When that happens, a vital block is taken out of the foundation we strive to build in an effort to ensure donor loyalty for future gifts. Lost or misplaced checks and other communications from donors, late and erroneous recording of gift/pledge dates and amounts, delayed and otherwise neglected acknowledgments, spelling errors of donors’ names, etc., all lead to lost or upset donors.

We can all agree that this critically important process must be done right. And it starts with the very first check or pledge from a donor when it arrives in the mail room. But in many non-profit organizations, there is a sharply divided opinion regarding just where those checks, pledges, and other donor communications should go next in order to ensure that all goes right with the receiving, posting, acknowledging, reporting, and banking process of donations.

When organizations talk about pledges, often times they have different meanings. For some, a specific payment promise, such as a fixed amount each month for a year (or in perpetuity) constitutes a pledge. Others believe that any promise to pay is a pledge, whether it’s for a certain amount or a certain timeframe. The dictionary definition of the word pledge is simply a promise to give money. (There are other definitions, but for our purposes we’re focusing on the financial one.) The question remains: when is a pledge not a pledge?

When it comes to putting promises to pay into FundRaiser Software, there are a couple of options. The first is to consider it a later promise to pay. This is good when there isn’t a definitive time frame for the money to be paid. In fact, there often may be some uncertainty about the money to be paid.

We have been advised to start asking our donors for three to five year pledges. The consultant advising us says it will save us a lot of time because we do ONE ask and then the payment is spread over five years. Our executive director likes the idea because she and the Finance Committee will be able to project income more accurately if they know people are bound by a pledge agreement. I like the idea of saving time and not having to deal with the donors every year—it seems like I will have more time to find new donors. But someone who heard you speak recently said you were opposed to multiyear pledges. Can you talk about the pros and cons?

Tony Poderis's recent blog (July 31st: How Long Should Donors Have to Fulfill Fundraising Pledges?) proposes that the donor should be allowed to set the time limit for fulfilling any pledge they make. Some folks might, at first glance, think this will dramatically increase the amount of work necessary to manage the overall pledge campaign, as well as the individual pledges. With FundRaiser's Pledge Module, available in Select and standard in Professional, this should be of little concern and here is why:

1. Flexibility of pledge length. With FundRaiser, no two pledges have to be the same. You can set defaults that you'd like to use, but you can adjust each pledge, as needed, to suit the donor.

In Sasha's recent blog on Pledge Management, BRING Recycling's FundRaiser user mentions several points in passing that could use some emphasis. One such point is tracking reminders. While it's easy to set up FundRaiser to send reminder letters to all those whose payments are coming due, or to send overdue letters to those whose payments are past due, it's not always so easy to remember to tell FundRaiser to carry out the plan. Very little is fully automated in FundRaiser, simply to prevent things from happening that you may not be ready to handle. Everything is "semi-automatic", in that you set up the chain of events ahead of time, but still have to "push start", or "yell 'GO!'" to get things moving. So setting up a Staff Tickle (Windows | Staff Tickle) as a nudge to get you moving is a great idea. You don't need a new reminder each month, since you can simply change the DO date once you've completed this month's reminder letters. And you can have separate tickles for reminders, overdues, or long overdue letters, too.

2. Overdue notices as secondary reminders

Most people associate overdue notices with those nasty reminders one might get if they've missed paying a utility bill at some time. Often those types of notices are quite aggressive and downright antagonizing, using verbiage that only the most callous of bill collectors might use. This is not, of course, the way we want to treat our donors, and therefore is not the way we want to use our overdue notices. Since you create these letter templates in FundRaiser's word processor, you can have them say pretty much anything you want. They can include the last payment date/amount, for instance, or the total that was pledged and how much has been paid to date. And you'll certainly want to remind the pledger of what has been done so far and has yet to be done to complete the task for which the money is being collected. All this can be done in a light, non-demanding, inclusive tone, since you want them as a part of your team, no just for their next payment. Better to build relationships based on mutually shared goals than to concentrate on a single payment.

When BRING Recycling began their capital campaign it was a big jump for them. Kara Brinkman, Administrative Assistant at BRING Recycling and a FundRaiser Select user, says "The capital campaign was a major change in mind set for our organization. We started out very grassroots in 1971 as a recycling center. As the community has become more aware and involved in our mission we’ve also evolved. Raising money and courting donors didn't come naturally to us, but we've done well. The community here in Eugene has been really supportive."

Their key to Phase 1

BRING’s capital campaign started with raising the money to build a “Planet Improvement Center.” The Center is a resale outlet for used building materials; and a community learning and action center. BRING has successfully finished Phase I of their capital campaign, raising over a million dollars in the process and built the building. Pledges have been key to the success of the capital campaign. "We had pledges ranging from $40 to $40,000. A lot of people wanted the option to make a pledge," says Kara.

First, it's good to know whether your pledges are better tracked through FundRaiser's Pledge Module (optional in Select, included in Professional) or not. That will depend on the make-up of the pledge itself. If a person (or organization) promises to give you a particular gift in the future, and will be giving it to you in one payment, then you don't need to use the Pledge Module, necessarily. The determining factor, in this case, might be whether you need to track promised payments as "accounts receivable" for accounting purposes. If so, you'll probably want to use the Pledge Module, as it makes it easier to do. If not, then you may just need to use the Gift Type Code "Later - Promise to Pay", to record a pledged amount.

If you set payment deadlines, as in Kim Klein's example (see her blog entry here), then you may want to set the Gift Date as the promised date (rather than the date the pledge was made), so that you'll later be able to Group together anyone with a gift/pledge due during a particular time period. Another reason to use the Pledge Module would be for pledges that adhere to the usual FundRaiser definition of a pledge: A promise to pay a certain amount of money in increments over a given period of time. This complicates things by necessitating a payment schedule, recording of individual payments, keeping track of balance due, etc., which the Pledge Module is designed to do.